Beef industry faces an identity crisis in the shifting meat market
Atwood, Colo. — Though it's too early to know for sure, it appears that America's appetite for beef is on the wane. And concern within the cattle industry is running deep. ``We just can't understand,'' says Herman Hettinger, after a jolting drive through a pasture to show off his eastern Colorado herd. ``I'd say 90 percent of the people in the area eat meat twice a day.''
He turns to his Chicago visitor: ``Why couldn't you eat a steak'' daily? His concern is real. Several cattle experts point to two trends that worry the industry:
Americans soon may be eating more poultry than beef. If this shift occurs and remains permanent, it would signal the most important change in meat demand since 1953, when beef displaced pork as America's No. 1 meat.
After decades of growth, the nation's appetite for all meat appears to be leveling off. Economists say this means any dramatic future growth in beef demand must come at the expense of other meats.
``You and I and the rest of the folks are eating about all the meat we're going to eat,'' says Topper Thorpe, general manager of Cattle-Fax, a market information and analysis service. ``And that suggests we're maturing'' in the meat industry.
So far, these projections are tentative, because the cattle industry has traditionally been a difficult-to-predict, boom-and-bust business. Since the turn of the century, its dramatic growth has come in cycles -- reaching peak production, cutting back, then roaring back stronger than ever. In 1975, the industry hit an all-time high of 132 million head of cattle.
For most of the years since then, however, the industry has been experiencing the longest and sharpest herd reduction in its history. Now, with the smallest US herd since 1968, it is about to find out whether to blame the slide simply on oversupply or on changes in demand.
``Are people actually willing to pay a higher price for a shorter supply?'' asks John Nalivka, livestock economist with the US Department of Agriculture. He believes they will. ``I don't see a lot of real problems on the demand side.''
But other economists are not so sure. Americans may be tiring of eating so much beef, they say.
``Somewhere in the late '70s, we saw a dramatic shift from an expansion to a contraction of beef demand,'' says Jake Ferris, a professor of agricultural economics at Michigan State University. ``I would say there's a reasonable chance that by the year 1990, we will see poultry meat surpass beef.''
``We're going through some dramatic changes right now,'' adds Mr. Thorpe.
In the short term, several factors are working against a dramatic uptick in cattle prices, these economists say. Consumer incomes are growing more slowly, supplies of chicken and pork are abundant, and these meats sell at one-third to one-half the price of beef.
In the long term, beef demand may decline because of changes in eating habits, they add. Chicken, for example, has quickly expanded into the frozen-food case while beef has not. Another problem: beef's poor image in an increasingly health-and-diet oriented society.
``All this publicity -- it's really done some damage,'' grumbles Mr. Hettinger. ``Someone can get on TV and do more damage in two minutes than we can do in a year.''
The industry, newly aware of the possible problems, is beginning to address them. The National Cattlemen's Association is looking into alternative marketing schemes and the Beef Industry Council is pushing for a cattlemen-financed program to promote beef. But, the response of the industry has been slow, experts say.
``What does the consumer want our product to be?'' asks Harlan Ritchie, a beef cattle specialist at Michigan State University. ``We are absolutely in the wilderness on that.''
This summer, prices dipped so low that some ranchers lost more than $100 for every head of cattle they sold. Cattle prices have turned up since then, but no one, including Hettinger, is sure what this means for the future.